Trump's announcement of tariffs poses a challenge for the EU
Prof. Dr. Julian Hinz, Research Director for Trade Policy at the Kiel Institut, comments on Trump's recent announcement that he will impose tariffs on Canada, Mexico and China when he takes office.
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“Donald Trump's recent announcement that he will impose tariffs on Mexico, Canada and China shows that he is serious about pursuing a protectionist course, even if it is to the detriment of the US. It is particularly alarming that he is taking this step against Mexico and Canada, the US's most important trading partners, with whom Trump had a trade agreement in place during his first term in office. For the European Union, this makes it clear that it must also brace itself for a protectionist US trade policy against the EU and prepare accordingly.
The US is one of the most important bilateral trading partners for the EU economy. Tariffs or other protectionist measures would directly impact European exports. However, long-term damage caused by a weakened WTO and a fragmentation of the global trade order into rival blocs would be even more serious.
To avoid an escalation, the EU could present a proposal for a trade agreement with the US that is limited to individual sectors. Such an agreement could limit short-term economic losses on both sides and strengthen confidence in the transatlantic relationship. At the same time, the EU should diversify its trade relations and quickly come to be able to defend itself militarily without US help in order to strengthen its negotiating position.
Maintaining the global trade order must also be the EU's top priority. A collapse of the WTO would hit the EU much harder economically than US tariffs. Trump's announcement shows how important it is for the EU to act strategically and cohesively, with all member states speaking with one voice.”
